Federal Reserve Bank of Dallas

Some takeaways from Friday's Dallas Fed conference on Texas-Mexico Energy Trade...thanks to all the speakers and organizers! 1. Mexico and Texas are closely linked when it comes to trade, energy is no exception 2. Texas refines much of Mexico’s oil and returns it to them in the form of gasoline 3. Mexico buys 75% of its natural gas from Texas, which delivers it by pipeline. They use the natural gas to produce electricity. 4. Massive imports of natural gas from Texas have lowered electricity prices in Mexico, improving cost of living and fostering economic development. 5. Texas also benefits, as the Permian is overflowing with natural gas. There is so much natural gas that the price of gas in the Permian has been negative on average over the last 6 months. Negative prices means that oil producers are paying companies to take away the associated gas, this additional cost is a burden on oil producers that lowers their incentive to drill new wells. 6. One unintended consequence of Mexico’s dependence on Texas natural gas is that the inflow of cheap natural gas from Texas has made it harder for Mexico to develop its own natural gas resources, which they have an abundance of. 7. Part of the problem with developing Mexico’s energy resources are laws that require companies to partner with Pemex. Pemex, Mexico’s state-owned oil company, lacks resources and expertise in fracking. 8. Meanwhile, plans to build a number of new power plants in Mexico in coming years will call for more supplies of natural gas (and renewables). Even if Mexico develops its own natural gas resources, there will still be growing demand for Texas’ natural gas. 9. Another option on the table, given Texas has a surplus of natural gas, is to begin exporting Permian natural gas (LNG) through Mexico, especially on the West Coast (for export to Asia). This would require more pipelines however, that are complex and costly to build, especially when they have to cross international borders. Jesse Thompson SMU Mission Foods Texas-Mexico Center Garrett Golding Courtney Weeks Adrian de la Garza Luis Bernardo Torres Ruiz Adrian Duhalt Alberto De La Pena Andrew Zoeller Mark Roles Clay Seigle Federal Reserve Bank of Dallas

Many people in our communities struggle to afford the basics, particularly as gasoline prices rise. That was an important theme at a recent meeting of the Federal Reserve Bank of Dallas Community Advisory Council, a group of nonprofit and education leaders from across the region who guide Dallas Fed leaders on how communities are experiencing the economy. The organizations represented on the council are seeing a lot of need in their communities, but also opportunity. The data center construction boom is creating jobs and a housing crunch; community colleges are seeing increased enrollment; and state investments in social services in New Mexico are spreading hope. Thank you to council chair Carine Feyten of Texas Woman's University for leading the discussion. These conversations are critical for Dallas Fed leaders to gain real-time insight on the state of the economy.

Over 200 industry experts joined us to discuss banking conditions, fraud mitigation and service provider integration at the Federal Reserve Bank of Dallas and the Texas Department of Banking ’s third annual Eleventh District Banking Conference. Throughout the day’s panels, we heard how community banks are benefiting from Texas’s economic growth in data centers, liquified natural gas and semiconductors, and how AI-enabled fraud remains a leading concern that will require enhanced vigilance. I appreciated the opportunity to connect with Dallas Fed director Robert Hulsey for a moderated conversation and to hear from other bankers on how their communities are experiencing the economy, deepening my understanding of the current landscape. Congratulations to Emily Greenwald , Lilliana Abbassi and their teams on hosting another successful conference, and thank you to all who took part in this important dialogue.